Types of Contracts ðĶ
Contracts are classified based on Validity, Formation, and Performance.
1. Based on Validity (Enforceability) âïļ
- Valid Contract: Has all essentials. Fully enforceable.
- Void Contract: Was valid initially, but ceased to be enforceable due to some reason (e.g., War, Ban).
- Example: A agrees to import goods from B (in Country X). War breaks out. Contract becomes Void.
- Void Agreement: Void ab-initio (from the beginning).
- Example: Agreement with a minor.
- Voidable Contract: Enforceable at the option of ONE party (the aggrieved party).
- Example: A forces B to sell his house at gunpoint (Coercion). B can choose to cancel it.
- Illegal Agreement: Forbidden by law. (e.g., Contract to kill someone).
- Unenforceable Contract: Good in substance but has technical defect (e.g., missing stamp/signature).
2. Based on Formation ðïļ
- Express Contract: Spoken or Written words.
- Implied Contract: By conduct or act. (e.g., Stepping into a bus implies you will pay for ticket).
- Quasi Contract: Created by law, not by parties. (e.g., Finder of lost goods must return them).
3. Based on Performance ð
- Executed Contract: Both parties have done their duty. (Cash Sale).
- Executory Contract: Something remains to be done.
- Unilateral: One party pending.
- Bilateral: Both parties pending.
Void vs Voidable
Void: Dead letter. No one can enforce it. Voidable: Sick patient. Can be cured (validated) or killed (cancelled) by the victim.
Quiz Time! ðŊ
Test Your Knowledge
Question 1 of 5
1. A contract which ceases to be enforceable by law becomes:
ðĄ Final Wisdom: "Knowing the type of contract tells you your rights. If it's Voidable, you have the power. If it's Void, you have nothing." âĄ
Next up: Offer - The starting point! ðĢ